The UK’s retail giant John Lewis Partnership has revealed that the country’s new Extended Producer Responsibility (EPR) packaging levy has contributed to a substantial first-half loss, highlighting the growing financial and operational impact of packaging regulations.
With packaging now directly affecting profitability, the news offers a warning to global packaging and retail stakeholders: sustainability compliance is no longer optional—it is a material cost driver.
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The UK EPR regime: key facts
The UK’s EPR scheme shifts full financial responsibility for household packaging waste onto the producers of packaging, including brand owners, importers, and retailers. Its main features include:
- Scope: Businesses handling more than 25 tonnes of packaging per year, or generating £1m or more in turnover, must comply.
- Obligations: Reporting the type, weight, and material of packaging supplied, registering with compliance schemes, and paying fees that cover collection, sorting, recycling, and treatment of packaging waste.
- Fee Modulation: Charges vary depending on recyclability, material type, and format, penalising less sustainable packaging while incentivising lighter, reusable, or mono-material designs.
- Implementation: Fee invoices for large producers commence in October 2025, although many companies, including John Lewis, have already booked costs in advance.
This scheme is part of a broader UK push to meet environmental targets and reduce packaging waste, aligning with the circular economy approach.
John Lewis’s financial hit
John Lewis reported a half-year loss of £34m before tax and exceptional items, compared with a £5m loss in the previous year. Excluding exceptional items, losses widened to £88m, partly due to technology upgrades and other operational investments.
Crucially, the company attributed £22m of its losses to the new EPR packaging levy. Waitrose, the supermarket arm of the partnership, bore a significant portion of the cost, given the volume of packaged products it supplies.
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By GlobalDataOverall sales grew 4% to £6.2 billion, demonstrating that revenue growth did not offset the regulatory cost burden.
John Lewis’s chair, Jason Tarry, emphasised that the retailer remains confident about full-year profit growth but warned of a challenging macroeconomic environment.
Implications for the packaging industry
John Lewis’s experience underscores the broader lessons for packaging stakeholders:
- Cost transparency is critical
Detailed knowledge of packaging materials, weights, and recyclability is essential. Companies without accurate data may face unexpected regulatory costs. - Sustainable design is a competitive advantage
Packaging that is easy to recycle, lightweight, or reusable will attract lower fees, while complex or mixed materials could significantly increase costs. - Supply chains must adapt
Upstream and downstream partners need to collaborate on materials and packaging formats to optimise cost and compliance. - Consumer pricing pressures
Passing increased packaging costs to consumers may be limited by price sensitivity, particularly in highly competitive retail sectors. - Regulatory complexity
Multiple reporting requirements, modulated fees, and evolving definitions of recyclable packaging create compliance risk. - Lifecycle considerations
Shifts to cheaper materials for regulatory reasons must be balanced against environmental impact, ensuring one problem isn’t swapped for another.
Strategic takeaways
For packaging producers, converters, and retailers, the John Lewis case highlights actionable steps:
- Audit packaging portfolios for recyclability, material type, and weight.
- Engage suppliers and supply chain partners to improve sustainability.
- Explore design innovations, such as mono-material formats, lighter packaging, or reusable options.
- Model cost impacts under different regulatory scenarios to understand financial exposure.
- Communicate sustainability achievements transparently to leverage brand value.
Global perspective
While this story centres on the UK, similar EPR schemes exist globally:
- EU: Longstanding packaging EPR rules, with continued modulation and enforcement under the Circular Economy Package.
- Asia: Countries like Japan, South Korea, and China impose producer responsibility schemes with varying fees and recycling targets.
- North America: Some Canadian provinces and U.S. states are implementing EPR-style regulations.
Global firms must anticipate diverse regulatory environments and adapt packaging strategies accordingly.
Looking ahead
John Lewis’s £22m hit from the UK EPR packaging levy is a cautionary tale for the retail and packaging industries. Packaging is no longer just a functional or marketing consideration—it is a financial and regulatory one.
Businesses that proactively adapt through sustainable design, accurate data management, and supply chain collaboration will gain competitive advantage, while those that delay may face escalating costs and compliance challenges.
